JOHN McKEEHAN AND LOLA McKEEHAN v. AUTO-OWNERS INSURANCE COMPANY
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RENDERED: June 17, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001091-MR
AND
NO. 2004-CA-001120-MR
JOHN McKEEHAN AND
LOLA McKEEHAN
v.
APPELLANTS/CROSS-APPELLEES
APPEAL AND CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE F. KENNETH CONLIFFE, JUDGE
ACTION NO. 00-CI-003657
AUTO-OWNERS INSURANCE COMPANY
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, JOHNSON AND McANULTY, JUDGES.
GUIDUGLI, JUDGE:
In this case involving insurance coverage for
a fire loss, Lola and John McKeehan have appealed from the
Jefferson Circuit Court’s Judgment in favor of Auto-Owners
Insurance Company entered March 18, 2004.
jury Instruction No. 3 relating to vacancy.
Lola and John dispute
Auto-Owners has
filed a protective cross-appeal from the Judgment
Notwithstanding a Verdict as to Instruction No. 2, entered May
7, 2004.
We affirm as to the direct appeal, rendering the
cross-appeal moot.
This case has an incredibly complex factual
background.
For purposes of this opinion, however, we will
limit our recitation to only those facts salient to the issues
before us.
In 1994, John and his mother, Lola, purchased a
multi-use building on a Y-intersection near Churchill Downs at
3136 Oakdale and 3141 S. 4th Street in Louisville, Jefferson
County, Kentucky.
Lola provided the down payment, and they
financed the purchase price through the sellers, Walter and Jane
Brumleve.
As a part of the agreement, John and Lola were to
keep insurance on the property and list the Brumleves’ interest
on the policy.
John and Lola later filed suit against the
Brumleves and their realtor due to zoning misrepresentations.
They also stopped making their monthly payments.
As a result,
the Brumleves filed a foreclosure action against John and Lola
in 1997.
During this time, John and Lola listed the building
for sale with at least two realtors.
This particular building has a long history of being
hit by automobiles, both prior to and during John and Lola’s
period of ownership.
In December 1997, a stolen truck hit the
north wall of the building, resulting in $22,500 worth of
damage.
John collected that amount from American Resources
Insurance Company, the company insuring the building at that
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time.
Plywood boards covered the front of the building
following the 1997 collision.
In early 1998, new commercial insurance coverage was
obtained on the property through Auto-Owners, in John’s name
only.
The policy contained an exclusion for vacancy, which
reads as follows:
6. Vacancy
If the building where loss or damage occurs
has been vacant for more than 60 consecutive
days before that loss or damage, we will:
a. Not pay for any loss or damage
caused by any of the following even
if they are Covered Causes of Loss:
(1)
Vandalism;
(2)
Sprinkler leakage, unless you
have protected the system
against freezing;
(3)
Building glass breakage;
(4)
Water damage;
(5)
Theft; or
(6)
Attempted theft.
b. Reduce the amount we would otherwise
pay for the loss or damage by 15%.
A building is vacant when it does not
contain enough business personal
property to conduct customary
operations.
Buildings under construction are not
considered vacant.
-3-
The policy also defined “business personal property” as
furniture and fixtures, machinery and equipment, stock, as well
as all personal property owned by the named insured and used in
the named insured’s business.
The policy also contained an
endorsement voiding coverage for fraud by the named insured, or
for any intentional concealment or misrepresentation of a
material fact concerning the covered property, the named
insured’s interest in the property, or a claim made under the
endorsement.
On June 17, 1998, the north side of the building again
sustained a significant amount of damage, this time due to a
fire.
Because the fire appeared to be suspicious, the
Louisville Arson Bureau opened an investigation into its origin.
Investigators determined that firefighters had to remove the
plywood boards covering the front of the building in order to
gain access to the building, where they found a burned vehicle,
which was determined to be stolen.
John later reported in his
claim to Auto-Owners that a car had hit the building, causing
the fire to start.
Following an investigation, Auto-Owners
denied John’s claim, citing his misrepresentations in his
application for coverage and in his claim for the fire loss;
that John set the fire himself or had someone else set it; and
that the building had been vacant for over sixty consecutive
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days and the fire was the result of vandalism, triggering the
vacancy exclusion.
John and Lola filed the present action in Jefferson
Circuit Court against Auto-Owners and Crimm Insurance Agency
(hereinafter “Crimm”), which had acted as the agent for AutoOwners in securing the insurance policy that covered the
property at issue.1
Following a period of discovery, the matter
proceeded to trial on March 2, 2004.
At the conclusion of the
testimony, the parties discussed the jury instructions.
for John objected to Instructions No. 2 and No. 3.
No. 3 read as follows:
Counsel
Instruction
“Do you believe from the evidence that
the building had been vacant for more than sixty (60)
consecutive days before the fire?
A building is deemed ‘vacant’
if it does not contain enough business personal property to
conduct customary operations.”
Regarding that instruction, John
objected to the lack of a definition of “business personal
property.”
After noting that the policy had been admitted as
evidence, the trial court indicated that counsel could point
this out to the jury during closing argument.
In the portion of
his closing argument regarding the vacancy exclusion, counsel
for John focused solely on the question of whether there was a
tenant in the building during the period of time in question.
1
Just prior to the trial of the matter, John and Crimm reached a settlement,
and during the trial, the trial court determined that Lola had a third-party
beneficiary status as she was not listed on the policy.
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The jury returned a “Yes” verdict on the vacancy instruction,
memorializing its finding that the building had been vacant for
more than sixty consecutive days before the loss, and returned a
verdict in favor of Auto-Owners.
The jury also returned a “Yes” verdict on Instruction
No. 2, which stated, “Do you believe from the evidence that
Auto-Owners Insurance Company would not have issued the
insurance policy to John McKeehan if it had been advised of the
Brumleves’ interest and the fact that the property was in
foreclosure?”
The trial court entered a Judgment for Auto-
Owners on March 18, 2004.
On John and Lola’s motion, the trial
court granted a JNOV on Instruction No. 2, but specifically
denied their motion as to the defense verdict arising from the
vacancy instruction.
John and Lola have appealed from the
judgment relating to the verdict based upon the vacancy
instruction, while Auto-Owners has cross-appealed from the JNOV
on Instruction No. 2.
On direct appeal, John and Lola argue that the jury
instructions should have contained the entire definition of
“vacancy” as set out in the policy, including the “under
construction” portion of the definition as well as the policy’s
definition of “business personal property.”
On cross-appeal,
Auto-Owners argues that the jury’s verdict on Instruction No. 2
was supported by probative evidence and should be reinstated.
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This Commonwealth has for decades followed a “bare
bones” approach to jury instructions.
“Our approach to
instructions is that they should provide only the bare bones,
which can be fleshed out by counsel in their closing arguments
if they so desire.”2
Later, this Court made it clear that “the
trial court’s function herein is only to set forth the
essentials for the jury.
It is the respective counsel’s duty to
see to it that the jury clearly understands what such
instructions mean, or do not mean.”3
Our Supreme Court very
recently addressed this issue in Lumpkins v. City of Louisville,4
emphasizing that the “bare bones” approach “applies to all
litigation. . . .
The concept permits the instructions to be
‘fleshed out’ in closing argument.”
In this case, John and Lola argue that the trial court
erred in failing to include the entire policy definition of
“vacant” and to further define “business personal property.”
It
has long been held “that a court need not define for the jury
terms or language when the meaning of them is commonly
understood by the lay public, but that it should do so when they
are understood only by persons versed in the subject matter in
2
Cox v. Cooper, 510 S.W.2d 530, 535 (Ky. 1974).
3
Humana, Inc. v. Fairchild, 603 S.W.2d 918, 922 (Ky.App. 1980).
4
157 S.W.3d 601, 605 (Ky. 2005).
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connection with which they are used.”5
John and Lola rely upon
the opinion of Williams v. Wilson6 to argue that jury
instructions based upon a specific policy definition should
follow that wording, just as in the case of statutory
definitions.
However, in Shemwell, the Court made it clear that
“insurance policies like and similar to the one in this case
will not be given a strict or verbatim construction.”
7
In that
case, the issue was whether “total and permanent disability” had
to be defined for the jury.
The jury instruction on vacancy John and Lola
tendered, but which was not used by the trial court, reads as
follows:
You will find for the Defendants under
this instruction if you believe from the
evidence that, for 60 consecutive days
before the fire, the damaged building did
not contain enough business personal
property to conduct customary operations or
the building was under construction during
the 60 consecutive days preceding the fire.
“Business personal property” as used in this
instruction means one or more of the
following items:
(a)
Furniture and fixtures, or
(b)
Machinery and equipment, or
5
Lewis v. Wood, 173 S.W.2d 983, 984 (Ky. 1943).
v. Shemwell, 116 S.W.2d 328 (Ky. 1938).
6
972 S.W.2d 260 (Ky. 1998).
7
Shemwell, 116 S.W.2d at 330.
-8-
See also Aetna Life Ins. Co.
(c)
Other personal property owned by
the Plaintiffs and used in their
business, or
(d)
Personal property of others that
was in the Plaintiffs’ care,
custody or control and located in
or on the building.
The trial court adopted the instruction tendered by Auto-Owners,
which provided a definition of vacant as not containing “enough
business personal property to conduct customary operations” for
sixty consecutive days prior to the loss.
Recognizing that Kentucky has a long-standing practice
of providing only “bare bones” jury instructions, we hold that
the vacancy instruction given to the jury in this instance was
sufficient to properly instruct the jury.
The jury had the
entire policy to review in its deliberations, and counsel for
John and Lola had the opportunity to “flesh out” the instruction
in his closing argument.
That counsel chose not to do so does
not render the instruction incorrect or lacking in any way.
Counsel could also have identified for the jury those items of
business personal property enumerated in John and Lola’s brief,
although the jury could very well have reviewed the photographs
and determined that any business personal property the building
might have contained and that was not damaged by the fire was in
an unusable state.
The trial court did not commit any error in
instructing the jury on vacancy, especially as the entire policy
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was in evidence and as counsel had the opportunity to “flesh
out” the “bare bones” instruction in closing argument.
Because we are affirming the direct appeal, AutoOwners’ protective cross-appeal is moot, and we need not address
it in this opinion.
For the foregoing reasons, the judgment of the
Jefferson Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Samuel B. Carl
Louisville, KY
Peter J. Sewell
Catherine M. Sewell
Louisville, KY
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